4 ms·

Why Aussie groceries cost so much

27 points by Specstacular 17y ago

andyjdavis 17y ago
Its kind of depressing which companies seem to grow into enormous enterprises in Australia. Mining companies and supermarkets. Pillaging natural resources, shafting farmers and consumers. Those seem to be our most successful business models. Depressing indeed.
- bmunro 17y ago
  And banks. A lot of the biggest companies in Australia are banks.
  - Scott_Culture 17y ago
    They are more like the retailers... huge local players, but pretty shy about international expansion.
- Scott_Culture 17y ago
  We need to be careful about equating company size with company 'nastiness'. The mining firms are (partly) of a huge scale because that is what is needed to succeed globally, and they have achieved the scale through very considerable international expansion (including substantial mergers - think Rio Tinto, and BHP Billiton). As the post argues, the two big Australian retailers haven't been anywhere near as 'brave' internationally.
  - andyjdavis 17y ago
    My somewhat poorly made point was that there don't seem to be many Australian companies that grow into large organizations purely by innovation. Electronics, Internet services, aerospace research/manufacturing, software. That kind of thing. We seem to do well at taking tried and true business models (dig up iron ore and sell it, buy cheap fruit and veg and sell it at a big mark up) but we have a poor track record for establishing creative companies. Creative in that they create something. products/services that didn't exist before. Its kind of weird that there seem to be so few Australian tech companies that are international big players. In terms of other large Australian companies there's also New Corp but Im not sure that dead tree publishing qualifies as an innovation based business. Plus I think they moved to the US a few years back.
bombs 17y ago
It's worth noting that the cheapest priced groceries at Woolworths and Coles tend to be their own brands, which cover a very wide range of products that you'd find at a supermarket. The Woolworths Select branded items, while being the cheapest, are often of a higher quality than a lot of name brand competitors.
- taitems 17y ago
  I'm sorry but no. You'll constantly hear people banging on about how the in-house brands are made by other reputable brands, and the likes of ACA and Today Tonight will constantly reinforce this fallacy. While it is true that reputable brands sometimes manufacture the in-house brand's product, it is not (as ACA would have you believe) a case of Cadbury's quality chocolate in cost saving packaging. "Reverse tendering" occurs, where the head office "buyer" will set an objective cost and manufacturers will compete in a reverse auction towards it. Cadbury and Nestle (and anyone who can keep up) will not simply provide their standard premium product, but look to cut as many costs as possible. What you will get is a final product that will probably be made from different ingredients, probably be manufactured with a different recipe and probably manufactured using different machinery/methods. What you are left with is a product that barely resembles its manufacturer's name brand product, and as long as it passes unit testing/quality control, Woolies or Coles don't really care. The almighty dollar.
  - ilkhd2 17y ago
    Yeah. Same true for America. You cannot eat Cadbury made in USA - every time I try, I throw the damn bar into the garbage. Taste like corn syrup.
  - robryan 17y ago
    True, depends what the product is though, for some things like the basics, milk and bread, I'm perfectly happy with the home brand version given the price difference.
    - sailormoon 17y ago
      Wouldn't be too sure about milk. Someone working for WW once told me that Home Brand et al buy milk which is in effect several days, maybe even a week, older than that which you get from Dairy Farmers &co.
ax0n 17y ago
Basically, Australia has a walmart. Or three.
- krakensden 17y ago
  except Walmart sells things really really cheaply
  - billswift 17y ago
    Actually, at least at the local Walmart, grocery prices have gone up enough over the last couple of years that there is little difference between Walmart and Giant. Some things are cheaper at Walmart and some at Giant.
- Scott_Culture 17y ago
  Not really, Walmart amounts to about 10-12 cents of every dollar spent in the US on fast-moving consumer goods. In Australia Woolworths and Coles/Wesfarmers account for almost 70 cents. At that level, it's not appealing for anyone to try and take them on!!
pmccool 17y ago
I can't help suspecting that part of it is using their supermarket business to fund their moves into things like alcohol and petrol.

27 points by Specstacular 17y ago

Its kind of depressing which companies seem to grow into enormous enterprises in Australia. Mining companies and supermarkets. Pillaging natural resources, shafting farmers and consumers. Those seem to be our most successful business models. Depressing indeed.

bmunro 17y ago
And banks. A lot of the biggest companies in Australia are banks.
- Scott_Culture 17y ago
  They are more like the retailers... huge local players, but pretty shy about international expansion.
Scott_Culture 17y ago
We need to be careful about equating company size with company 'nastiness'. The mining firms are (partly) of a huge scale because that is what is needed to succeed globally, and they have achieved the scale through very considerable international expansion (including substantial mergers - think Rio Tinto, and BHP Billiton). As the post argues, the two big Australian retailers haven't been anywhere near as 'brave' internationally.
- andyjdavis 17y ago
  My somewhat poorly made point was that there don't seem to be many Australian companies that grow into large organizations purely by innovation. Electronics, Internet services, aerospace research/manufacturing, software. That kind of thing. We seem to do well at taking tried and true business models (dig up iron ore and sell it, buy cheap fruit and veg and sell it at a big mark up) but we have a poor track record for establishing creative companies. Creative in that they create something. products/services that didn't exist before. Its kind of weird that there seem to be so few Australian tech companies that are international big players. In terms of other large Australian companies there's also New Corp but Im not sure that dead tree publishing qualifies as an innovation based business. Plus I think they moved to the US a few years back.

bombs 17y ago

It's worth noting that the cheapest priced groceries at Woolworths and Coles tend to be their own brands, which cover a very wide range of products that you'd find at a supermarket. The Woolworths Select branded items, while being the cheapest, are often of a higher quality than a lot of name brand competitors.

taitems 17y ago
I'm sorry but no. You'll constantly hear people banging on about how the in-house brands are made by other reputable brands, and the likes of ACA and Today Tonight will constantly reinforce this fallacy. While it is true that reputable brands sometimes manufacture the in-house brand's product, it is not (as ACA would have you believe) a case of Cadbury's quality chocolate in cost saving packaging. "Reverse tendering" occurs, where the head office "buyer" will set an objective cost and manufacturers will compete in a reverse auction towards it. Cadbury and Nestle (and anyone who can keep up) will not simply provide their standard premium product, but look to cut as many costs as possible. What you will get is a final product that will probably be made from different ingredients, probably be manufactured with a different recipe and probably manufactured using different machinery/methods. What you are left with is a product that barely resembles its manufacturer's name brand product, and as long as it passes unit testing/quality control, Woolies or Coles don't really care. The almighty dollar.
- ilkhd2 17y ago
  Yeah. Same true for America. You cannot eat Cadbury made in USA - every time I try, I throw the damn bar into the garbage. Taste like corn syrup.
- robryan 17y ago
  True, depends what the product is though, for some things like the basics, milk and bread, I'm perfectly happy with the home brand version given the price difference.
  - sailormoon 17y ago
    Wouldn't be too sure about milk. Someone working for WW once told me that Home Brand et al buy milk which is in effect several days, maybe even a week, older than that which you get from Dairy Farmers &co.

ax0n 17y ago

Basically, Australia has a walmart. Or three.

krakensden 17y ago
except Walmart sells things really really cheaply
- billswift 17y ago
  Actually, at least at the local Walmart, grocery prices have gone up enough over the last couple of years that there is little difference between Walmart and Giant. Some things are cheaper at Walmart and some at Giant.
Scott_Culture 17y ago
Not really, Walmart amounts to about 10-12 cents of every dollar spent in the US on fast-moving consumer goods. In Australia Woolworths and Coles/Wesfarmers account for almost 70 cents. At that level, it's not appealing for anyone to try and take them on!!

pmccool 17y ago

I can't help suspecting that part of it is using their supermarket business to fund their moves into things like alcohol and petrol.